UPDATE 1-Cipla Medpro's chief executive quits, shares rise

* CEO and founder quits

* Says to take action against company

* Shares up nearly 4 pct(Adds details)

JOHANNESBURG, Oct 8 (Reuters) - South Africa's Cipla Medprosaid on Monday its chief executive had stepped down and heplanned to take legal action against the company he founded,ending months of speculation about his future at the drug maker.

Cipla Medpro, which has a tie-up with India's Cipla Ltd, said Chief Executive Jerome Smith stepped down lateon Friday "on the basis of an irretrievable breakdown in theworking relationship with the board and alleging he was forcedto resign".

South Africa's third-largest pharmaceutical firm suspendedSmith in August pending an investigation into "seriousallegations" that it had previously declined to identify.

It said on Monday the suspension was based on more than 20charges against Smith including potential "gross misconduct" and"dishonesty" for approving bonuses and pay rises for himselfthat were not recommended by the board.

The charges also allege Smith may have taken loans or otherfinancial assistance from the company without proper approval,and had 45 people on the company's books who were not actualemployees and were paid on his behalf.

The company said Smith planned legal action against it,which it planned to defend.

Shares of Cipla Medpro were up 4 percent on the news.(Reporting by David Dolan)

((david.dolan@thomsonreuters.com)(+27 11 775 3150)(ReutersMessaging: david.dolan@thomsonreuters.com@reuters.net))